The Commerce Ministry has recommended restricting purchase of tax-free alcohol to one bottle at duty-free shops as part of steps to reduce import of non-essential goods, sources said.
The ministry has also recommended to its finance counterpart that purchase of cigarette cartons at duty-free shops should be prohibited, they said.
These recommendations are part of proposals made by the commerce ministry for the forthcoming Budget, which would be unveiled by Finance Minister Nirmala Sitharaman on February 1.
Currently inbound international passengers are allowed to buy two litres of alcohol and a carton of cigarette from these shops.
According to sources, there are countries that allow only one litre of liquor to international passengers and the same practice can be adopted in India.
This suggestion assumes significance as the government is looking at various ways to curtail import of non-essential goods into the country to rein in trade deficit.
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A duty-free shop is where an inbound international passenger can generally purchase goods worth about Rs 50,000 without paying any import duty.
The commerce ministry has also suggested increase in customs duty on several products like paper, footwear, rubber items and toys to promote 'Make in India' and boost manufacturing growth, sources said.
The ministry has proposed rationalisation of basic customs or import duty on over 300 items from different sectors, including furniture, chemicals, rubber, coated paper and paper boards.